Cathay Pacific’s shareholders have given the green light for a HK$39 billion ($5.03 billion) recapitalisation plan.
At the closing of an extraordinary general meeting held on 13 July, the carrier’s shareholders voted overwhelmingly to approve the plan.
In total, three resolutions and two special resolutions were put up for voting at the meeting. These include approving the issue of preference shares to Aviation 2020 – a limited company wholly owned by government — as well as approving a HK$11.7 billion rights issue.
Cathay first announced the recapitalisation plan on 9 June, as it struggled to stay afloat during the coronavirus outbreak.
The carrier has been hard hit by a collapse in travel demand from the pandemic, having lost around HK$2.5 to HK$3 billion in cash a month since February, when the coronavirus outbreak became more widespread.
Passenger revenue for the period also collapsed to just 1% of what it used to earn in past years.
The recapitalisation plan will comprise three tranches — the first will be the preference share issuance to the government, followed by the rights issue, and a corresponding HK$7.8 billion bridge loan facility issued by Aviation 2020 to Cathay.
Cathay said in June that the recapitalisation plan was drawn up after exploring “available options”, and adds that it was necessary “to ensure it has sufficient liquidity to weather this current crisis”.
Cathay’s management will also re-evaluate its business model in the longer term, and will, by the end of the year, make recommendations to its board on the “optimum size and shape” of the group.